We're all individuals when it comes to buying a car.
But for those of us that choose to drive something exotic, like an imported car or grey vehicle, securing finance for your new wheels isn't as a straight forward as financing a family car. So it helps to be informed about the options available to you.
Why does the type of car you finance matter?
Most banks and finance companies, take the type of asset you wish to finance into account when they are assessing your loan. There are a number of reasons for this.
Firstly, depending on the loan product choosen, the car is taken as collateral security for the loan by way of a mortgage. When the funds are advanced to you the bank will lodge its interest in the goods on a public register. Once you have paid out the loan in full the mortgage is released and the security interest removed. However, in the event that you default under your loan, the car may need to be returned to assist finalise the loan. Once the car has been sold at auction and the proceeds of the sale are applied to your account and if a shortfall still remains you will be personal liable for the outstanding debt. Given that an imported vehicle is likely to be unique, there may only be a limited number of buyers for the car at the time of auction meaning that the bank may recover a lower amount than you might expect. The likelihood of a lower recovery rate is built into their assessment of the loan.
Secondly, the type of asset may form part of the lenders credit score matrix, along with the total amount you want to borrow and the amount of deposit you have contributed. Due to the lower expected recovery rate in the event of a forced sale, imported vehicles or grey imports are generally considered higher risk and attract a higher interest rate.
What banks or finance companies cater for imported cars?
In general, the secured loan products of most banks, credit unions and building societies, are designed to finance Australian complied vehicles that were originally sold as new vehicles, up to seven (7) years of age. Imported vehicles and those over greater than seven (7) years old are generally financed using a personal loan product. The problem with this is that the loan assessment criteria for an unsecured personal loan is substantially higher as the bank doesn't have security over the car. This makes buying an imported car far harder for those buyers who are not home owners or buyers, have limited job stability or financial assets.
There are a limited number of finance companies that specialise in providing a secured car loan for imported vehicles. In most cases, the relevant loan products are distributed via finance brokers due to the additional work required for originating a loan for imported vehicles.
AFS specialises in financing imported vehicles and grey imports.
If you decide you need finance for an imported car, you can deal directly with AFS' direct sales team or you can choose to use a finance broker who can arrange the loan on your behalf and do all the paperwork for you.
What type of loan products can I use to finance my imported car?
In Australia, there are effectively two (2) loan products available to finance an imported vehicle.
Can I use a finance broker to obtain a loan for an imported car?
Yes. The AFS Import Car Loan product is used extensively by finance brokers as many of the mainstream asset finance lenders will often only lend on cars distributed by large manufacturers that were sold new and originally complied in Australia.
Also if you were to arrange a loan through your bank, if the vehicle is over 7 years of age then the relevant product is an unsecured personal loan which is often more expensive than their standard car loan product.
Please note that if you use a finance broker you may be charged an origination fee which is separate to the AFS Fees & Charges but can also be financed as part of your loan. If you use a finance broker, you should ask for a copy of their credit guide and obtain a credit quote from them.
Can I arrange finance even though I'm still looking for the car?
Yes. AFS understands that most buyers of imported vehicles are extremely discerning with their choice of vehicle as they want to purchase something a bit different that stands out from the crowd. This means the process of buying an imported car often takes longer than buying a standard family car.
However, once you've found the car of your dreams, the last thing you want to be doing is racing around trying to secure finance.
At AFS, we can arrange a conditional approval, valid for 30 days, that enables you shop with confidence. And even if you run out of time, we can simply refresh your approval because we want you to buy the ar you love.
Benefits of financing your imported car through AFS.